The disputed math behind Medicaid expansion fight

Republicans across Texas haven’t been shy about their opposition to the Affordable Care Act, or the expansion of Medicaid it includes.

“Medicaid expansion is a misguided, and ultimately doomed, attempt to mask the shortcomings of Obamacare. It would benefit no one in our state to see their taxes skyrocket and our economy crushed as our budget crumbled under the weight of oppressive Medicaid costs,” Texas Gov. Rick Perry said at a press conference in March 2013.

The politics of healthcare have become immensely polarized and personal with the debate and passage of the Affordable Care Act, often called Obamacare. The Medicaid expansion is a key component of that law because it’s the mechanism that would provide health insurance to Americans who can’t afford to purchase it from the healthcare exchange. Originally, states were required to be part of the program, however the Supreme Court later ruled that participation was optional.

But would the cost of the Medicaid expansion really cause taxes to skyrocket, and the state’s economy and budget to crumble?

Currently, Texas has strict limits on who is eligible for the state’s program. For instance, adults who don’t have children are ineligible to join the program in almost all circumstances. The Medicaid expansion proposed under the Affordable Care Act would allow anyone who makes less than 138 percent of the federal poverty line — which equated in 2013 to a whopping $15,856 for a single adult or $32,499 for a family of four — to join the program. The federal government would pay almost the entirety of the cost in the beginning and, under the law, would always pay for at least 90 percent of the expansion.

News reports and state officials have commonly stated that expanding the Medicaid program in this fashion would cost the state about $15 billion over 10 years. Except, that figure, provided by the state Health and Human Services Commission, is actually an estimated total cost for all aspects of the Affordable Care Act, many of which the state is going to have to pay for even though state leaders have remained steadfastly opposed to almost all aspects of the law.

“What?!?,” you say?

In a presentation given to lawmakers in March 2013, state Health and Human Services Executive Commissioner Kyle Janek estimated that because of the publicity and outreach involved with the Affordable Care Act, more people who are eligible for Medicaid but not currently part of the program would likely enroll. The estimated price tag? About $6 billion over 10 years, or approximately 40 percent of the total Affordable Care Act implementation cost.

According to that presentation, the estimated cost for expanding Medicaid eligibility to all adults who make less than the 138 percent of the poverty level was about $8.8 billion over 10 years. However, the Legislative Budget Board, the Legislature’s budget arm, came up with a far lower cost estimate of about $4 billion over 10 years. The differences can be attributed to two factors, HHSC spokeswoman Stephanie Goodman said. First, HHSC projects that more people will join the Medicaid program than the LBB does; and second, HHSC projected it would cost more to provide the coverage than the LBB does.

Secondly, assume that $1.5 billion figure is correct and that adding it to the state budget would cause taxes to skyrocket and the state’s economy to crumble. However, it begs the question why that hasn’t already happened. Taxpayers in the five major urban counties in Texas — Harris (Houston), Dallas, Tarrant (Fort Worth), Bexar (San Antonio) and Travis (Austin) — already shell out more than $1.5 billion a year in hospital district taxes to provide care and facilities for their largely indigent populations. A study commissioned by Methodist Healthcare Ministries and Texas Impact estimated total local government spending on providing health care at roughly $2.5 billion a year.

Thirdly, expanding Medicaid would produce additional revenue for hospital districts, potentially allowing county governments to cut their tax rate. In Bexar County, hospital district officials estimate that expanding Medicaid would save them $52 million a year, roughly 20 percent of the amount of revenue they get from the hospital district tax, and County Judge Nelson Wolff said he would cut property taxes to pass on the savings if it were approved. In Harris County, hospital district officials say the expansion of Medicaid would mean they would receive an additional $77.5 million in reimbursements, or roughly 15 percent of their tax revenue, based on 2013 financials.